Money laundering watchdog orders audit of PayPal

PayPal self-reported an issue related to its International Funds Transfer Instruction reporting obligations

Australia’s money laundering watchdog, AUSTRAC, has ordered the appointment of an external auditor to scrutinise PayPal’s compliance with financial crime laws.

AUSTRAC announced today that it had had “ongoing concerns” about PayPal Australia’s compliance with the Anti-Money Laundering and Counter-Terrorism Financing Act (AML/CTF Act).

AUSTRAC said those concerns relate to the online payment services provider’s compliance with International Funds Transfer (IFT) Instruction reporting obligations that require regulated entities to report the transfer of funds or property to or from Australia.

“Regulated businesses like PayPal Australia, who facilitate payments and transactions for millions of Australian customers every year, play a critical role in helping AUSTRAC and our law enforcement partners stop the movement of money to criminals and terrorists,” said AUSTRAC CEO Nicole Rose.

“PayPal is an important partner in the fight against crime. However, when we suspect non-compliance AUSTRAC will take action to protect the Australian community.”

The auditor will be required to report to AUSTRAC within 120 days of being appointed. They will scrutinise PayPal’s compliance with anti-money laundering and counter-terrorism financing rules, IFT reporting obligations, and record-keeping obligations.

“PayPal is fully committed to complying with all applicable laws and regulations in the 200+ markets in which we operate,” a spokesperson for PayPal said.

The spokesperson said that the company had self-disclosed an issue with its reporting system for IFT Instructions.

“We are working in full cooperation with AUSTRAC to remediate this reporting system issue and to undertake the audit as outlined by AUSTRAC in the time specified,” the spokesperson said. “There is no impact to our customers, who can continue to use PayPal services as usual.”

Last year the Commonwealth Bank of Australia and AUSTRAC resolved civil proceedings related to the CBA’s anti-money-laundering compliance regime.

CBA agreed to pay a fine of $700 million as well as $2.5 million in legal costs incurred by AUSTRAC.

In June this year AUSTRAC ordered the appointment of an external auditor to examine ASX-listed Afterpay’s compliance with the AML/CTF Act. An interim report is expected to be handed down today.

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Tags paypalAUSTRACmoney laundering

More about AustraliaCommonwealth BankCommonwealth Bank of AustraliaPayPalRose

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